Internet bots - or computer software programmed to engage in criminal cyber activities - siphon billions of dollars a year from the ad industry. These bots create websites filled with infringed content and generate fake traffic through a complex network of infected computers. In 2016, ad fraud created by internet bots is expected to cost advertisers $7.2 billion, up from $6.3 billion in 2015, according to a report from the Association of National Advertises (ANA) and White Ops. The increasing cost of ad fraud is forcing both ad buyers and sellers to reevaluate how and where to spend ad budgets.

A new report from BI Intelligence, lays out how bot traffic originates and the various points where it breaks into the digital media ecosystem. The report also discusses the most important trends in bot traffic on the buy and sell sides, based on conversations BI Intelligence conducted with industry executives. Further, it explains how new industry standards and industry groups like the Trustworthy Accountability Group (TAG) are looking to mitigate the impact of bot traffic. Finally, it walks through the effects of AppNexus' decision to eliminate bot traffic from its ad network.

Here are some key takeaways from the report:

Botnets are still primarily a desktop problem, but that is expected to change in the coming years. Bot traffic is not as common on mobile devices, both because detection firms have yet to make the technology to account for bot traffic and because bot operators have less revenue to gain from targeting mobile. But bots are expected to follow ad spend and eventually become more prevalent on mobile.

Impression-based campaigns see a greater share of bot traffic than performance-based campaigns, while more expensive ad formats tend to be hit harder than less expensive inventory. Bot operators try to gain as much revenue as possible through their fraud activities and thus typically target more expensive ads.

Both the sell side and the buy side are responsible for mitigating the effects of bot traffic. Publishers are responsible for knowing where they are sourcing their traffic from so as not to sell adverts that have a chance of being seen by nonhuman users. Ad platforms and exchanges should attempt to eliminate ad fraud from their supply by removing publishers sourcing high levels of bot traffic. Buyers need to reevaluate their buying practices and - if possible - place a greater emphasis on inventory quality rather than efficiency and cheapness.